When a trust protector appointed a trustee while removed by the beneficiaries of the trust was held valid because of the invalidity of the removal of the trust protector, the U.S. District Court of South Carolina decided.
The beneficiaries of the trust had the right to remove the trust protector and removed him, but did not appoint a new trust protector, even though the Trust Instrument provided that there “shall always be a Trust Protector” for each trust. The removed trust protector appointed a new trustee in the meantime.
The court held that since the beneficiaries violated the Trust Instrument by not appointing a new trust protector after removing the old one, the procedure was invalid, and therefore, the appointment of the new trustee became valid.
See Schwartz v. Wellin.
Posted by Jin Keol Park, Associate Editor, Wealth Strategies Journal